ETH with the potential to rise by 5% could break above the $2,300 resistance level
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has been showing signs of strength in the past few days and is poised to continue its upward trajectory, with the potential to rise by 5% and convert the $2,300 resistance level into a support floor. ETH has gained more than 15% in the past month, outperforming Bitcoin (BTC), which has been trading sideways in a narrow range.
ETH is currently trading at $2,200, after bouncing from the support zone of $2,000-$2,100, which has held since late November. The bulls are eyeing the $2,300 level, which has acted as a strong barrier for the past two weeks. A clear break and close above this level could open the doors for more gains, as ETH could target the next resistance levels at $2,400 and $2,500.
Several factors could support the bullish case for ETH in the near term. First, the Ethereum network has been undergoing a series of upgrades, known as the Ethereum 2.0 transition, which aims to improve its scalability, security, and efficiency. The most recent upgrade, the London hard fork, implemented a new fee mechanism that burns a portion of the transaction fees, reducing the supply of ETH and creating deflationary pressure.
Secondly, the demand for ETH has been increasing, as it is the native currency of the Ethereum ecosystem, which hosts a variety of decentralized applications (DApps), such as decentralized finance (DeFi), non-fungible tokens (NFTs), gaming, and social media. According to DappRadar, the total value locked (TVL) in DeFi protocols on Ethereum has reached over $120 billion, while the trading volume of NFTs on Ethereum has surpassed $10 billion in 2023.
Thirdly, the technical indicators are showing positive signals for ETH. The 50-day moving average (MA) has crossed above the 200-day MA, forming a golden cross, which is a bullish sign. The relative strength index (RSI) is above 50, indicating that the momentum is in favor of the buyers. The MACD histogram is also positive, suggesting that the trend is upward.
Therefore, ETH could rise 5% to convert the $2,300 resistance level, if it maintains the current momentum and breaks above the psychological barrier. However, some risks could hinder the bullish scenario. The main risk is regulatory uncertainty, as some governments have been cracking down on the crypto industry, imposing bans, restrictions, or taxes. This could affect the sentiment and adoption of ETH and other cryptocurrencies.